Brevan Howard Asset Management LLP, Europe’s second-biggest hedge fund, is rebuilding in the U.S. after largely pulling out during the 2008 financial crisis.
The $39 billion firm, run by billionaire Alan Howard, is seeking traders for its New York office after adding 14 people to its U.S. unit in the past five months, four people familiar with the matter said. Among those recently hired by London-based Brevan Howard are Don Carson, who ran Credit Suisse Group AG’s U.S. dollar swaps desk, Josh Bertman, a mortgage trader from the Zurich bank, and strategists from Deutsche Bank AG.
Brevan Howard, whose U.S. unit expanded to 16 people last month from two in June, is hiring as Wall Street banks shrink or eliminate trading desks and hedge funds struggle to profit from Europe’s sovereign-debt crisis and other global economic trends. The firm, whose main fund is on track for its second-worst year, is expanding to gain more insight into U.S. markets, attract traders and give employees the opportunity to relocate to New York, said one person with knowledge of the matter, who like the others asked not to be named because the information is private.
“Expanding in New York at this time is a smart move given how there’s a lot of blood on the street as banks and hedge funds cut talent,” said Gustavo Dolfino, president of New York- based recruitment firm WhiteRock Group LLC. “Some of the hot strategies right now include global macro and commodities.”
A spokesman for Brevan Howard declined to comment.
Brevan Howard is a macro hedge fund, which seeks to profit from broad economic trends by trading everything from currencies to commodities. Such funds posted an average 0.9 percent loss this year through October, according to data compiled by Bloomberg.
Brevan Howard’s Master Fund, which has never had a losing year since its 2003 inception, returned about 1.8 percent through Nov. 9, according to a person briefed on the returns. Its worst year on record was a 1 percent gain in 2010.
Carson was hired last month, and Bertman is set to join after leaving Credit Suisse in October, people with knowledge of the hires said earlier this month. Giles Coppel, a former trader at hedge fund Tudor Investment Corp., is listed as the head of trading in a registration filed by Brevan Howard’s U.S. unit.
Vinay Pande, who was chief investment adviser at Deutsche Bank, was scheduled to join the hedge fund’s New York office last month, heading a team of three researchers. David Gilbert, an attorney in Brevan Howard’s London office, became chief operating officer of the U.S. subsidiary in September, filings show.
The firm also hired Shelley Goldberg, a former commodities strategist at Nouriel Roubini’s Roubini Global Economics, said another person with knowledge of the matter.
Worldwide, Brevan Howard employs about 430 people, of which 110 are directly involved in investing. Apart from London and Geneva, Brevan Howard has offices in Hong Kong, Tel Aviv, Washington, Sao Paulo and St. Helier in the island of Jersey, according to its website. Its New York offices are on Madison Avenue, in midtown Manhattan.
Howard, 49, whose personal wealth was estimated at 1.4 billion pounds ($2.2 billion) by the Sunday Times in April, relocated in 2010 to Geneva from London, joining other hedge- fund managers who moved to Switzerland after the U.K. government announced plans to raise taxes on top earners.
The first part of Brevan Howard’s name is made up of the initials of founding partners. Chris Rokos, the “R” in Brevan, left the firm in August. James Vernon, the former chief operating officer and the “V”, left last year, and Jean- Philippe Blochet, the “B”, left in late 2009. The remaining co-founders are Howard and Trifon Natsis.
Brevan Howard’s U.S. operations were cut back in 2008, and many of those who worked in the U.S. were given the option of moving to London, according to two former employees. The downsizing included an office in Connecticut, which employed former traders from RBS Greenwich Capital Markets who focused on interest rate products, including U.S. government bonds and derivatives, for the firm’s master fund, another former employee said.
Brevan Howard’s main investment-advisory unit claimed an exemption from U.S. hedge-fund regulation in March of this year and formed a new U.S. unit a month later that is subject to oversight by the Securities and Exchange Commission. BlueCrest Capital Management LLP and Winton Capital Management Ltd., the third-biggest and fourth-biggest European hedge funds, are registered with the SEC. Man Group Plc, Europe’s largest hedge fund, has had a registered U.S. unit since 2000.
Next page: U.S. Unit
According to a June 8 filing with the SEC, Brevan Howard “envisaged” that the U.S. unit registered with the SEC would initially manage about $300 million on behalf of the master fund run out of London. The unit, Brevan Howard US Investment Management LP, was slated to open in July, according to the document. In August, Brevan Howard’s U.S. unit amended its registration to say that the net assets totaled $800 million.
Brevan Howard, which is regulated in the U.K. by the Financial Services Authority, previously spun off a mortgage trading operation run in the U.S. by David Warren, a former managing director and chief operating officer in Morgan Stanley’s mortgage-backed securities department.
Warren in March 2009 set up his own firm under the name DW Investment Management LP. The firm manages money exclusively for Brevan Howard partnerships, including the Brevan Howard master fund and the Brevan Howard Credit Catalysts fund, and is on the same floor of a New York office building as Brevan Howard’s U.S. unit. DW’s assets under management totaled almost $4 billion as of March 15, according to a government filing.
While Warren controls investment decisions, Brevan Howard’s compliance department monitors DW’s daily trading activity, according to documents filed with the SEC. Brevan Howard also establishes all arrangements for the custody of securities in funds managed by Warren’s firm, and has the ability to prescribe risk mandates, the filing says.
Brevan Howard had also registered a brokerage unit in New York that helps raise money from American investors. About 64 percent of the money invested by pension plans and other institutional investors in hedge funds comes from North America, while Europe accounts for 24 percent, according to Preqin Ltd., a London-based research firm.
The firm is currently looking to the U.S. to raise money for a three-year-old currency fund. It filed an Aug. 9 private- placement notice with the SEC to raise an unspecified amount of assets for its Macro FX fund. The filing allows a hedge fund to raise money without going through the SEC’s registration process for securities, based on the regulator’s view that potential investors are sophisticated and able to fend for themselves.
“Fundraising is tough at the moment but easier in the U.S. than the rest of the world,” said Daniel Celeghin, a partner at Casey Quirk & Associates LLC, a Darien, Connecticut-based firm that advises asset managers. “U.S. investors are the friendliest market to hedge funds right now.”